CSX Acquisition of Pan Am Railways

bsweep wrote: ↑Wed Jul 29, 2020 5:15 pm Pure speculation on my part, but I am guessing Springfield Terminal, MEC, and BM all pay some sort of licensing fee to the paper corporation which likely holds the "Pan Am" brand name.

There may be that sort of internal financial stuff going on, but the paper corp (Pan American World Airways, headquartered in an iconic strip mall in Somersworth, NH that Juan Trippe likely never laid eyes on) is itself part of the Tim Mellon empire.

I could easily be wrong here - but - I would take the repainting of 507 into the old "grey" paint to mean that the Mellon family is NOT planning to include any intellectual property related to Pan Am (ie, the name, trademark, logo, etc) in the sale of the railroad assets. I.e., they'll sell the railroad assets and retain the Pan Am IP. Which sort of makes sense... whoever buys the railroad assets will, in all likelihood, have a pre-existing "brand" to run the trains under, and would have no use for buying someone else's brand. The railroad assets and the airline branding have always been a strange combination anyway.

I thought about that too. If he is looking to retain the Pan Am brand, is the name reverting back to Guilford, or is the B&M, MEC, PT & ST being sold separately (devesting in the railroads under the Pan Am umbrella)?

Supposedly, we'll know soon. I still have my $2 on Topper (gotta love how the NS spokesman answered the question at the earnings call with that non-answer. Also how they covered over a "loser quarter" with spin).

But whoever gets it, as soon as there is a closing, wherever the "Blue Meatball" is on the property will have a date with the paintbrush.

mrj1981 wrote: ↑Thu Jul 30, 2020 3:05 pm I could easily be wrong here - but - I would take the repainting of 507 into the old "grey" paint to mean that the Mellon family is NOT planning to include any intellectual property related to Pan Am (ie, the name, trademark, logo, etc) in the sale of the railroad assets. I.e., they'll sell the railroad assets and retain the Pan Am IP.

I always assumed the Pan Am intellectual property was not part of the sale. It's a separate company (Pan Am Brands), and they never said anything about selling Pan Am Brands, so there was never any reason to assume the intellectual property would be bundled with the railroad.

Regarding 507:

It costs thousands of dollars to repaint a locomotive. 507 is owned by GATX and leased by Pan Am. Let's assume for the sake of argument that it'll soon be returned to the lessor:

• Why would the current lessee repaint it at all when the existing paint job is only five years old?

• If GATX said they wanted it back with a fresh coat of paint, wouldn't they want it repainted in their own corporate paint scheme, and not the paint scheme of a defunct railroad holding company?

• If it had anything to do with intellectual property, why wouldn't the current lessee simply paint over the Pan Am name/logo?

Adding to this, if this repaint were a part of some big publicity stunt or public announcement, why repaint a hum-drum old GP-40-2? Why not paint one of their "new" Dash-8's in Guilford Paint? That would be like an airline unveiling a new livery on an old CRJ-200.

On an entirely different note, (and this is a big stretch here) but I noticed that the corporate owners of the Portland-Montreal Pipeline have been doing some fairly substantial work on their pipeline in a few places through South Portland and have been doing work on their pier near Spring Point Light. This seems odd to me since they themselves have admitted that unless they win their ongoing pipeline reversal lawsuit with the city of South Portland (which they are unlikely to win) then the pipeline has no future.

So my outlandish question is: I know demand for imported crude is very low right now, but could a short segment of the pipeline be used to deliver oil products (crude or refined) from the waterfront to Rigby for rail transloading? The existing pipeline runs very close to Rigby, and constructing some sort of transload facility would't be too much of a challenge.

MEC407 wrote: ↑Thu Jul 30, 2020 4:56 pm If it had anything to do with intellectual property, why wouldn't the current lessee simply paint over the Pan Am name/logo?

Mr. Maine Central, I didn't say anything to have equipment going to the "beauty parlor" (such as when I take my ride for its annual detailing). I simply had in mind to paint over the "Blue Meatball", as I highly doubt if the buyer is interesting in acquiring the rights to the Pan Am brand.

Cosakita18 wrote: ↑Thu Jul 30, 2020 5:39 pm So my outlandish question is: I know demand for imported crude is very low right now, but could a short segment of the pipeline be used to deliver oil products (crude or refined) from the waterfront to Rigby for rail transloading? The existing pipeline runs very close to Rigby, and constructing some sort of transload facility would't be too much of a challenge.

IIRC, this or something very similar to this was either proposed by PPL or was mentioned by PPL during the trial as a theoretical possibility. But AFAIK this scenario would still be illegal under the city ordinance.

Some of the work you saw them doing might just be routine maintenance/testing, which I believe they're required to do until such time as they officially decommission the pipeline, which they haven't done yet.

This is a topic of great interest to me but I don't want to go too deep into it because it's off-topic, but feel free to PM me if you'd like to chat more about it.

All arguments over the holding company name are a joke. I could set up a company called New England Railways, Ltd. That company could buy B&M Corp, and Maine Central (whatever their formal name is). Those companies would include their holdings of subsidiary companies, such as Portland Terminal, an Springfield Terminal, and whatever other entities exist, such as the trucking company.

Which ever way it is handled, I'm sure that corporate and tax attorneys , as well as possibly CPAs will come up with a plan on how to conduct the transaction in the least cumbersome manor, while also making it so the corporations involved are structured so that tax structure is the least burdensome.

The system may get split up among several companies. They may set up corporations to buy which ever line. They may even use an existing company to do so. A good example was the recent CSX-CN deal. CN was buying using the Bessemer and Lake Erie subsidiary. When N&W bought the D&H, they formed a company called Delaware and Hudson Railway, which bought the assets of the Delaware and Hudson Railroad. There are two examples of how things might be done.

newpylong wrote: ↑Wed Jul 29, 2020 1:20 pm PAS (or whatever it becomes) would still need to play nice and let whoever operates East of Ayer to access the Worcester Main, probably a condition of the sale. This is simplified today as the ST is the carrier for both paper railroads.

I can't find the document at the moment, but I'm 99% sure the PAS STB paperwork spelled out trackage rights through Ayer and over the Worcester Main for PAR.

MEC407 wrote: ↑Wed Jul 29, 2020 7:23 pm Bizarre if true. 507 was rebuilt and repainted in PAR colors in 2015 as part of the GATX sale/leaseback arrangement. The most recent photos I've seen of it are from July 2019. At that time its PAR paint was in good condition and it still had "GATX OWNED" written on both sides of the cab.

Photos of the new paint job seem to indicate that the "GATX OWNED" was not included, and there has been at least 1 report the unit is no longer GATX owned.

https://www.facebook.com/photo?fbid=102 ... 6218813426

Gilbert B Norman wrote: ↑Fri Jul 24, 2020 4:35 pm Great analysis, Mr. B&M 1227.

It will be interesting to see if the end-of-month announcement of a buyer noted at topic's outset will come to pass.

Considering the number of "raiders" that have wormed into the railroad industry of late (did Mellon have any kind of railroad background?), it would be nice if one of them had producing efficient railroad transportation on the plate.

Say what you wish about EHH and Precision Railroading, but he was a railroad man who wanted the industry's full potential be realized, and not just a property to be flipped.

Mr. Norman, it doesn't appear that Mr. Mellon had any railroad experience before jumping into the fray:

https://www.bloomberg.com/news/articles ... ium=social

While the article touches on Mr. Mellon's political donations, it also spells out the course his business career took.

troffey wrote: ↑Fri Jul 31, 2020 8:29 pm

newpylong wrote: ↑Wed Jul 29, 2020 1:20 pm PAS (or whatever it becomes) would still need to play nice and let whoever operates East of Ayer to access the Worcester Main, probably a condition of the sale. This is simplified today as the ST is the carrier for both paper railroads.

I can't find the document at the moment, but I'm 99% sure the PAS STB paperwork spelled out trackage rights through Ayer and over the Worcester Main for PAR.

Yes that is correct. The sale was contingent on such rights being conveyed to PAR. If the railroad continues to be split in Ayer one would expect a conveyance of those rights so that whoever owns east of Ayer can still access CSXT, like PAR.

Whirl considering the possible interest of NS I found myself wondering how much of CN's traffic is in coal.

I found some reporting from two years ago showing a couple of weeks in February where the mix was about 10% coal and coke and 90% everything else.

Norfolk Southern from the same source (Market Realist) and timeframe (February 2018) was 30% coal and coke and 70% everything else.

June 2020 Cash on Hand for CNI was CAD $375M

June 2020 Cash on Hand for NSC was USD $1.14B

CNI has about 22K employees and NSC has 24K.

Much to my surprise in spite of the far higher market capitalization Norfolk Southern is the more profitable company and is slightly larger.

Canadian National's offer seems likely to be an all stock purchase. Norfolk Southern on the other hand could potentially purchase as a cash buyer. If Pan Am chose to do owner financing and spread out some lease payments that would probably work even better and might net them a higher price.

I am assuming that Pan Am owns their assets outright with the exception of leased power and that they have little to no debt against their real estate which would prevent owner financing.




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troffey wrote: ↑Fri Jul 31, 2020 8:29 pm

newpylong wrote: ↑Wed Jul 29, 2020 1:20 pm PAS (or whatever it becomes) would still need to play nice and let whoever operates East of Ayer to access the Worcester Main, probably a condition of the sale. This is simplified today as the ST is the carrier for both paper railroads.

I can't find the document at the moment, but I'm 99% sure the PAS STB paperwork spelled out trackage rights through Ayer and over the Worcester Main for PAR.

Q: can both PAR and PAS "directly service" the same customers at Hill Yard such as Devens Recycling? How about elsewhere at Ayer such as Ardent Mills, Catania Oils, and the old Ford yard for trash transloading? I'm guessing PAR can't service the Sanvel auto facility? If PAR and PAS can currently service the same customers over the stretch where PAR enjoys trackage rights, I'm guessing that it is done with a common AY local and only the billing paperwork shows which entity is getting the revenue?
The reason I ask these questions is if Pan Am is to be split up among 2 owners, eg, PAS to NS and PAR to, say, G&W, then I'm guessing Ayer customer access may have to be negotiated as well especially if different RRs' crew are involved.

On a related note, if NS is to own 100% of PAS, I'm guessing CSX might want some conditions so as to keep its current level of access to the customers it indirectly serves in D3 via PAS (eg, various LPG transloads and Ardent Mills).